CHAPTER 4 the payee or endorsee.
The
REVENUE AND OTHER RECEIPTS
Revenue
- Is the gross inflow of economic
benefits or service potential during
the reporting period when those
inflows result in an increase in equity,
other than increases relating to
contributions from owners.
- Includes only those that are received
or receivable by the entity in its own
account.
Receipts
- Refers to actual cash collections from
all sources during a period.
FUNDAMENTAL PRINCPLES FOR REVENUE
a. All revenues of an entity shall be
remitted to the National Treasury
and included in the General Fund of
the National Government unless
another law specifically allows
otherwise.
b. All moneys and property received
by a public officer, acting in any
capacity or upon any occasion, shall
be accounted for as government
funds and government property,
unless another law specifically
allows otherwise.
c. Amounts received in trust and from
business-type activities of the
government may be separately
recorded and disbursed in
accordance with relevant rules.
d. Receipts shall be recorded as
revenue of Special, Fiduciary or
Trust Funds, or Funds other than
the General Fund only when
authorized by law.
e. A collecting officer shall
immediately issue an OR upon
collecting payment of any nature.
f. Where mechanical devices are used
to acknowledge cash receipts, the
COA may approve, upon request,
the exemption from the use of
accountable forms.
g. Temporary receipts shall never be
used to acknowledge the receipt of
public funds.
h. Pre-numbered official receipts shall
be used in strict numerical
sequence. Duplicate copies shall be
the exact copies of the original.
i. A collecting officer shall accept
payments to the government in the
form’s checks, upon proper
endorsement and identification of
collecting officer shall not use
government funds to encash
private checks.
j. Receipts of government funds shall
be acknowledged in accordance
with the law- indicating the date of
receipt, from whom and on what
account the fund was received.
Types of Funds (G.S.T.R.D.S. S)
 General Fund- available for any
purpose other than those which
other funds have been designated
to.
 Special Fund- Designated for
special purposes.
 Trust Fund (Fiduciary Fund) -
Held by a government agency or
public officer acting as trustee,
agent, or administrator for the
fulfillment of a condition.
 Revenue Fund- comprises all
funds derived from the income of
any government agency and
available for appropriation or
expenditure in accordance with the
law.
 Depository Fund – fund held in an
authorized depository bank over
which the recipient agency retains
control for the lawful purposes for
which the fund was received.
 Special Account in the General
Fund (SAGF) – established to
facilitate the funding of priority
activities of the government. The
SAGF is sourced from specific,
grants and donations, and other
sources identified under the law.
The following are relevant legal
provisions regarding the SAGF:
a. All income and collections for
Special and Fiduciary Funds shall
be remitted to the Treasury and
treated as SAGF.
b. The SAGF shall be considered as
being automatically appropriated
for a purpose authorized by law,
except when the General
Appropriations Act (GAA) provides
otherwise.
c. SAGF shall be released to
government agencies subject to the
approval of the President.
 Special Purpose Funds- funds that
the President allocates for special
programs and projects. SPFs are
not under the accountability of any
particular government agency.

Sources of Revenue
a. Exchange Transactions (Reciprocal
transfers) – one entity receives assets
or services, or has liabilities
extinguished, and directly gives
approximately equal value to another
entity in exchange.
Revenues from exchange transactions arise
from the ff:
i. Sale of Goods or Provisions of
Services to third parties or
other government entities.
Ex:
a. Service Income – Permit,
Registration, Franchising,
Licensing, Legal, Passport, Visa,
Processing Fees
b. Business Income – School,
Examination, Rent, Communication
Network, Income from Hostel, Sales
Revenue, Hospital, Share in the
Profit of Joint Venture
ii. Use by other entity of assets
yielding interest, royalties
and dividends or similar
distributions.
Ex:
a. Interest Income – charges for the
use of cash or cash equivalents, or
amounts due to the entity.
b. Royalties – fees paid for the use of
the entity’s assets such as
trademarks, patents, software, and
copyrights;
c. Dividends- share of the National
Government from the earnings of
its capital investments in
Government-Owned or Controlled
Corporations and other entities.
Recognition of Revenue from Exchange
Transactions
Sales of Goods
i. Revenue from sale of goods shall
be recognized when all of the ff
are satisfied.
 Significant risks and rewards of
ownership of the goods are
transferred to the buyer;
 Entity does not retain
continuing managerial
involvement or effective
control over the goods sold;
 It is probable that economic
benefits will flow to the entity;
 Revenue can be measured
reliably; and
 Costs relating to the
transaction can be measured
reliably.
Rendering of services
ii. Revenue from supply of
services is recognized on a
straight line basis over the
period services are rendered.
However, revenue is recognized by
reference to the stage of completion if
the outcome of the transaction can be
estimated reliably, such as when all of
the ff conditions are satisfied:
 The stage of completion of the
transaction at the reporting date
can be measured reliably;
 It is probable that economic
benefits will flow to the entity;
 Revenue can be measured reliably.
 Costs relating to the transactions
can be measured reliably.
Interest
- Recognized on time proportion
basis that takes into account the
effective yield on the assets.
Royalties
- Recognized as they are earned in
accordance with the substance of
the relevant agreement.
Dividends
- Recognized when the entity’s right
to received payment is established.
Measurement of Revenue from Exchange
Transactions
- fair value of the consideration received or
receivable.
Exchanges of goods or services with:
i. Similar nature and value
- Do not give rise to revenue
ii. Dissimilar nature and value
give rise to revenue measured
using the ff:
Fair value of the goods or services received,
adjusted by the amount of any cash
transferred.
Fair Value of the goods or services given up,
adjusted by the amount of any cash
transferred.
b. Non-exchange transaction (Non-
reciprocal Transfers) – an entity
receives value from another entity
without directly giving
approximate equal value in
exchange.
 Taxes- are compulsory payments
intended to provide revenue to the
government.
  Fines and penalties – monetary property
sanctions received as a consequence - Passage of
of brench of laws. f. Property the time
 Gifts, Donations and Tax period for
Goods/Services In-Kind- are which the
tax is levied.
voluntary transfers of assets that
one entity makes to another, normally
fee from stipulations. Transfers
Recognition of Revenue from Non- - Inflows of future economic benefits or
Exchange Transactions service potential from non-exchange
transactions.
- Recognized on a cash basis until a
reliable measurement model is Example
developed. The asset and revenue or
liabilities are recognized when  Fines and Penalties
collected or when these are - Recognized as income in the year
they are collected.
measurable and legally collectible.
 Gifts, Donations and Goods In-
Tax Revenue Kind
- Recognized as revenue when it is
- Recognized at a gross amount and not probable that future economic
reduced for expenses paid through benefits or service potential will
the tax system. flow to the entity.
 Service In-Kind
Expenses paid through the tax system - Not recognized as revenue due to
- Those expenses which should be paid the uncertainties affecting the
entity’s ability to control those
irrespective of whether the taxpayer
services and measure them at fair
pays taxes, or uses a particular value.
mechanism to pay taxes.  Debt Forgiveness
Note: Tax revenue shall not be grossed up for - When a lender cancels the debt of a
the amount tax expenditures. government entity, the debtor
recognizes revenue equal to the
Tax expenditures carrying amount of the debt
forgiven.
- Are preferential provisions of the law - When a controlling entity cancels
that provide certain taxpayers with the debt, the cancelled debts is
concessions that are not available to treated as contribution from
others. owners and not revenue.
 Bequest
Type of tax Taxable event - Transfers made according to the
(I.V.G.C.D.P) provisions of deceased person’s
a. Income tax - Earning of will. Recognized as revenue,
taxable measured at the fair value of the
income resources received or receivable.
b. Value - Undertaking  Grant with Condition
added tax of a taxable - Initially recognized as liability and
activity recognized as revenue only when
c. Goods and - Purchase or condition is satisfied.
services tax sale of
taxable
goods or Measurement
services
d. Custom - Movement a. Assets – at the acquisition- date fair
duty of dutiable value.
goods or b. Liabilities – at present value, when
services the effect of time value of money is
across the material.
custom c. Revenue- at the amount of increase
boundary in net assets.
- Death of the
e. Death duty owner of the Concessionary loans- Loans received by an
taxable entity at below market terms.